[Federal Register Volume 89, Number 33 (Friday, February 16, 2024)]
[Notices]
[Pages 12407-12409]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-03305]


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SURFACE TRANSPORTATION BOARD

[Docket No. FD 36741]


Union Pacific Railroad Company--Operation Exemption--in Tooele 
County, Utah

    On November 21, 2023, Union Pacific Railroad Company (UP) filed a 
petition under 49 U.S.C. 10502(a) for exemption from the prior approval 
requirements of 49 U.S.C. 10901 to reinstitute common carrier service 
over an approximately 1.04-mile portion of rail line known as the 
Warner Branch, between milepost 0.0 connecting to the Shafter 
Subdivision and milepost 1.04, in Tooele County, Utah (the Line). On 
December 11, 2023, BNSF Railway Company (BNSF) moved for the Board to 
instead institute a proceeding under 49 U.S.C. 10502(b) and set a 
procedural schedule for consideration of UP's petition. As discussed 
below, the Board will grant UP's petition and deny BNSF's motion.

Background

    According to UP, the Warner Branch was formerly owned and operated 
by its

[[Page 12408]]

predecessor, Western Pacific Railroad Company (WP). (UP Pet. 2.) In 
1983, WP sought and received authority to abandon the Warner Branch in 
Western Pacific Railroad--Abandonment Exemption--in Tooele County, 
Utah, FD 30208 (ICC served Aug. 9, 1983). (UP Pet. 2.) UP says that it 
is seeking to reinstitute common carrier service over the Line as part 
of a transaction with Savage Tooele Railroad Company (STR), in which UP 
agreed to sell STR the right-of-way and track assets between milepost 
1.04 and milepost 6.94 of the Warner Branch so STR could construct 
approximately 11 miles of new rail line connecting to the Warner Branch 
to serve shippers located at Lakeview Business Park and connect to the 
national rail network.\1\ (UP Pet. 2-3). UP further states that it did 
not want to sell the Line to STR because it has been using it as 
ancillary track to support operations on the Shafter Subdivision. (Id. 
at 3.)
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    \1\ STR's petition to construct the new line is currently before 
the Board in Savage Tooele Railroad--Construction & Operation 
Exemption--Line of Railroad in Tooele County, Utah, Docket No. FD 
36616. STR had originally indicated that either UP would retain 
ownership of the Line for use as ancillary track or STR would 
acquire the Line and reinstate common carrier service over it. STR 
Pet. 4-5, June 30, 2022, Savage Tooele R.R., FD 36616. After the 
Board questioned how STR's proposed line would connect (and remain 
connected) to the national rail network should UP continue to retain 
the Line as ancillary track under 49 U.S.C. 10906, and requested 
supplemental information, see Savage Tooele R.R.--Construction & 
Operation Exemption--Line of R.R. in Tooele Cnty., Utah, FD 36616, 
slip op. at 2 (STB served Aug. 24, 2022), STR confirmed that UP 
decided to retain ownership of the Line and petition to reinstate 
common carrier operating authority over this segment, STR Verified 
Suppl. at 1, Sept. 20, 2022, Savage Tooele R.R., FD 36616.
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    In its December 11 motion, BNSF states that, as a condition of the 
Board's 1996 approval of the merger between UP and the Southern Pacific 
Rail Corporation (SP),\2\ it was granted trackage rights to operate 
over the Shafter Subdivision and the right to interchange with any new 
short line railroad connecting to the Shafter Subdivision. (BNSF Mot. 
1.) BNSF argues that it appears UP structured its transaction with STR 
in such a way as to establish a physical barrier between the Shafter 
Subdivision and STR so that BNSF cannot interchange with STR, as BNSF 
asserts it is entitled to do under the UP/SP merger conditions and the 
Restated and Amended Settlement Agreement (RASA) between UP and BNSF, 
which the Board approved in the context of its review of the merger 
transaction. (Id. at 1-2.)
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    \2\ See Union Pac. Corp.--Control & Merger--S. Pac. Rail Corp., 
1 S.T.B. 233, 419 (1996).
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    UP and STR separately replied to BNSF's motion on January 10, 2024. 
UP asks the Board to deny BNSF's motion, asserting that it has not 
violated BNSF's rights and that BNSF can demand arbitration under the 
RASA's arbitration provision if BNSF believes its rights were violated 
by UP. (UP Reply 4-5.) STR does not take a position on the merits of 
BNSF's motion but asks the Board to deny the motion because considering 
BNSF's claim and the relief it seeks in the context of this exemption 
proceeding would significantly prolong the proceeding and delay the 
rail construction project, thereby delaying STR's ability to meet the 
needs of rail shippers locating in Lakeview Business Park. (STR Reply 
4.)

Discussion and Conclusions

    BNSF's Motion. BNSF asks the Board to institute a proceeding under 
49 U.S.C. 10502(b) and set a procedural schedule for consideration of 
UP's petition. BNSF maintains that UP structured its transaction with 
STR and acted with respect to the Line so that BNSF cannot interchange 
with STR, thus violating its rights under the RASA. (BNSF Mot. 1-2.) 
According to BNSF, ``UP's action is consistent with other recent 
attempts by UP to frustrate the competition-preserving conditions 
imposed by the Board in connection with its approval of the UP/SP 
merger.'' (Id. at 2.)
    UP's effort to seek common carrier operating authority over the 
Line is separate and distinct from BNSF's claimed right to access STR 
and its future shippers via the Line under the terms of the RASA. See 
Union Pac. R.R.--Operation Exemption--in Bexar & Wilson Cntys., Tex., 
FD 35776, slip op. at 3-4 (STB served Dec. 24, 2013). BNSF itself has 
stated that it ``believes that, regardless of the ownership or 
regulatory status of the [Line], BNSF should have the right to 
interchange with STR once the new short[ ]line begins operating, 
consistent with STR's stated intent and UP's obligations under RASA 
Section 8(k) and the UP/SP merger conditions.'' (BNSF Mot. 3.) Granting 
UP the authority to reinstitute common carrier service over the Line 
does not preclude BNSF from seeking, through either arbitration or a 
new, separate Board proceeding, a determination that BNSF is entitled 
to access STR via the Line. Moreover, granting UP common carrier 
operating authority over the Line will help avoid delay to STR's 
project and ensure that its business park shippers are connected to the 
national rail network. The Board notes that, in any future proceeding, 
whether before an arbitrator or the Board, this decision shall not be 
construed as permitting UP to defeat any rights that BNSF may have had 
to interchange with STR or serve shippers at Lakeview Business Park had 
the exemption not become effective.
    BNSF's motion to institute a proceeding and set a procedural 
schedule will therefore be denied.
    UP's Petition for Exemption. Under 49 U.S.C. 10901, a rail carrier 
may not reinstitute operations over abandoned rail line without the 
prior approval of the Board. However, under 49 U.S.C. 10502(a), the 
Board shall, to the maximum extent consistent with 49 U.S.C. subtitle 
IV, part A, exempt a transaction or service from regulation upon 
finding that: (1) regulation is not necessary to carry out the rail 
transportation policy of 49 U.S.C. 10101 (RTP); and (2) either (a) the 
transaction or service is of limited scope, or (b) regulation is not 
needed to protect shippers from the abuse of market power.
    Detailed scrutiny of the proposed transaction through an 
application for review and approval under 49 U.S.C. 10901 is not 
necessary to carry out the RTP. Reinstitution of service on the Line 
would facilitate rail transportation to tenants of the Lakeview 
Business Park and thus promote the RTP by minimizing the need for 
federal regulatory control (49 U.S.C. 10101(2)), ensuring the 
development and continuation of a sound rail transportation system with 
effective competition among rail carriers and with other modes, to meet 
the needs of the public (49 U.S.C. 10101(4)), reducing regulatory entry 
and exit barriers (49 U.S.C. 10101(7)), and providing for the 
expeditious handling and resolution of proceedings (49 U.S.C. 
10101(15)). Other aspects of the RTP would not be adversely affected.
    Regulation of this transaction is not needed to protect shippers 
from the abuse of market power. Rather, reinstitution of service is a 
step toward providing the shippers at Lakeview Business Park with a 
rail transportation option that otherwise would not exist. See Savage 
Tooele R.R.--Constr. & Operation Exemption--Line of R.R. in Tooele 
Cnty., Utah, FD 36616, slip op. at 2 (STB served Aug. 24, 2022) (``[I]t 
is not clear how STR's proposed line will connect (and remain 
connected) to the national rail network'' should UP ``retain the right-
of-way between milepost 0.0 and milepost 1.04 to use as ancillary 
track. . . .''). And, as noted above, this decision does not affect 
BNSF's rights under RASA Section 8(k) and the UP/SP merger conditions. 
Moreover, the transaction is limited in

[[Page 12409]]

scope since the Line is only 1.04 miles long and reinstitution of 
common carrier service will merely connect STR's proposed line to the 
interstate rail network.
    Under 49 U.S.C. 10502(g), the Board may not use its exemption 
authority to relieve a rail carrier of its statutory obligation to 
protect the interests of its employees. However, labor protective 
conditions may not be imposed on transactions under 49 U.S.C. 10901. 
See 49 U.S.C. 10901(c).
    UP states that the proposed action will not result in changes to 
existing rail carrier operations or existing operations on the Line 
that would exceed the applicable thresholds of 49 CFR 1105.7(e)(4) or 
(5). Therefore, under 49 CFR 1105.6(c), this transaction is 
categorically excluded from environmental review. Similarly, under 49 
CFR 1105.8(b)(1), no historic report is required because the subject 
transaction is for reinstituted rail service, UP has indicated no plans 
to alter railroad properties 50 years old or older, and any abandonment 
of service would be subject to Board jurisdiction.
    It is ordered:
    1. BNSF's motion to institute a proceeding and set a procedural 
schedule is denied.
    2. Under 49 U.S.C. 10502, the Board exempts UP's reinstitution of 
service over the Line from the prior approval requirements of 49 U.S.C. 
10901.
    3. Notice of the exemption will be published in the Federal 
Register.
    4. The exemption will be effective on March 14, 2024.
    5. Petitions to stay must be filed by February 23, 2024. Petitions 
for reconsideration and petitions to reopen must be filed by March 4, 
2024.
    6. This decision is effective on its service date.
    By the Board, Board Members Fuchs, Hedlund, Oberman, Primus, and 
Schultz.

Jeffrey Herzig,
Clearance Clerk.
[FR Doc. 2024-03305 Filed 2-15-24; 8:45 am]
BILLING CODE 4915-01-P